Critical perspectives on ecology, society and development in the Mekong region

Facing the reality of hydropower

The Mekong River is one of the world’s largest and most productive places for inland wild capture fisheries. More than 60 million people depend on the resources within the Mekong Basin for their livelihoods and as an important source of income.1 The Mekong River also holds significant cultural value for many rural communities and provides essential nutrients to the agricultural lands in the region.

Over the past two decades there has been a rapid development of large-scale hydropower projects in the Mekong region. Dam developers and governments argue that this has clear benefits in terms of energy security and economic development. Yet the consequences of dams on the ecosystems, biodiversity, fisheries and the livelihoods of local communities have become increasingly clear, and the dubious claims of “energy security” or “poverty reduction” made by the hydropower industry have come under closer scrutiny.

Expansion of energy projects but for whom?

For each Mekong country, the energy industry looks different due to varying levels of demand and production capacity. The countries with comparatively high electricity consumption and adequate electricity production for domestic use are countries such as Thailand, Vietnam, and China. These countries purchase electricity from smaller energy markets in countries such as Cambodia, Myanmar and Laos.

This pattern can particularly be seen in Laos, where in 2008 the export of electricity amounted to approximately 30% of all Laos’ export levels.2 The electricity, mainly hydropower, was exported to their more developed neighbours, such as Thailand and Vietnam, particularly to the larger urban areas and cities. The electricity produced in the less developed Mekong countries rarely remains in the country for domestic use, where many rural communities still lack access to electricity. In that sense, the distribution of energy is very unbalanced because it is transferred from the rural to the urban, from the less developed to the more developed. This uneven distribution of energy in the Mekong region translates into two juxtaposing realities in terms of rural electrification levels, where Thailand and Vietnam have reached nearly 100% in rural electrification whilst Cambodia, Laos and Myanmar continue to lag behind.3

The pattern of uneven access and distribution of energy continues to characterise the growing energy infrastructure of the Mekong region. Hydropower is leading the race to increase the region’s energy capacity and is heavily supported by foreign investment, development aid and banks.

Energy security: A dubious claim

The justification for dams as attaining energy security is continuously used and propagated, yet is energy infrastructure expansion really resulting in energy security?

Let’s take a look at Thailand: In the present system, the country’s Power Development Plan is based on energy demand forecasts, which in turn is grounded in GDP growth forecasting. However, these two forecasts diverge in regards to the variable of time, where energy demand forecasts are projected for a period of twenty years whilst GDP projections are calculated for a period of three years at the most.4 This divergence in forecasting makes the calculations troublesome because 1) It is based on an unrealistic 10-year forecast of GDP growth, and 2) It is founded in the prediction of continued exponential growth. The current forecasting system and energy policy-making is misleading and unrealistic, resulting in a growing gap between energy demand projections and our reality.

As GDP growth is over-projected, so too is energy demand in Thailand, which can be seen by examining two variables in energy planning, namely ‘peak demand’ and the ‘reserve margin’. The highest demand of electricity within a year is called peak demand, which is used as the main figure representing energy demand. In Mekong countries, the hot season creates peak demand as air conditioning is more heavily used, but such extreme heat tends to only last for a few weeks. Although using the peak demand as the general demand figure guarantees electricity coverage during the hottest weeks of the year, it is only required during a very short timeframe and does not reflect the average energy demand of the population within a year.

On top of the over-projected annual energy demand, there is the reserve margin. The reserve margin functions as a cushion in case of emergencies. Currently, the reserve margin in Thailand is at 15%, although there has been efforts to raise it.5 Therefore, there is more than enough electricity in the Thai energy grid, due to over-projections and inflated demand. This over supply of electricity leads to most of the energy being lost because it is not needed, as energy security is already secured.

“Economic growth” for whom?

It is often argued that the development of large-scale hydropower is essential to economic growth and sustainable development as revenues can be used for “poverty alleviation”. However, many barriers such as corruption and a lack of regulation prevent such social development.

For instance, aiming to become the “battery of Southeast Asia”, Laos has 25 dams currently in the planning phase, 12 under construction, and many more that are undergoing feasibility studies.6 Yet it is also a country that ranks number 145 out of a total of 176 countries in Transparency International’s Corruption Perception Index 2014. In a country such as Laos, with a high degree of corruption, lack of free press and a limited civil society, the so-called sustainable approach to hydropower projects is difficult to attain due to the political context where accountability, transparency and participation cannot be properly ensured.

The development of large dams has also resulted in the involuntary resettlement of 40-80 million people worldwide, primarily afflicting the poor who are further impoverished by relocation.7 These resettled communities receive different forms of compensation, if any, and are forced to restore and restructure their livelihoods without sufficient assistance. In most cases, the promise of economic development is not met, as it clearly appears that revenues from the dam projects are not shared with the affected local communities.

The myth of “sustainable hydropower”

The Mekong countries are embarking on dam building under the banner of “sustainable hydropower”. But this is a problematic concept because it is built on a conflict of interest. Hydropower as a tool to achieve sustainable development stands in conflict to the interest of dam developers who wish to maximise profit.

Although some projects take into account the negative impacts of dam construction, it is often insufficient and superficial. The compensation to the affected communities and attempts to minimize the environmental impact of the projects are often inadequate because serious attempts would significantly increase costs of the hydropower project, and would no longer make it profitable to invest in.

Even if a hydropower project could be achieved in a sustainable manner, the benefits tend to sustain merely on the short-term and thus, the actual sustainability of hydropower development is greatly contested. Large dam projects pose both short-term and long-term challenges and risks, such as the flooding of large areas of land and irreversible impacts on river basins and ecosystems.8

Activists and local riparian communities along the Mekong River raise awareness about the importance of protecting the Mekong River from the destructive effects of hydropower. Source: International Rivers. https://www.flickr.com/photos/internationalrivers/16233481914/

Furthermore, they are not economically rational. Before taking the adverse impacts on the environment and local communities into account, it has been studied and determined that the actual construction cost of large dams is too high to generate a profitable return.9 Not only is the estimated cost of large-scale dams too optimistically and overconfidently calculated, but so is their planned timeframe. Large dams take a significantly long period of time to be constructed and regularly face many delays, hindering them from effectively resolving urgent energy crises. Their huge structure also makes them less agile and flexible for future energy scenarios.10

Thus, hydropower as a means of attaining sustainable development is a weak justification because 1.) It is often difficult to attain due to the lack of transparency, participation and accountability in Mekong countries. 2.) There might be economic growth, but no trickle-down effect to the poorest, especially not those directly affected by the dam project. 3.) There cannot be sustainable large-scale hydropower due to its destructive impacts on the environment 4.) Dams are too costly, too time-consuming, and too rigid to be able to accommodate future energy scenarios 5.) The so-called “sustainable large-scale hydropower” is unlikely to work as long as it is driven by profit maximization, where any gains in sustainability will continuously be traded-off for profit.

It is time to come to terms with the fact that big dams in the Mekong region are a curse on ecosystems and local livelihoods. The governments in the region need to urgently make a U-turn to explore other more sustainable, socially just and economically rational alternatives for an energy-efficient future.

Ansar, Atif and Flyvbjerg, Bent and Budzier, Alexander and Lunn, Daniel, Should We Build More Large Dams? The Actual Costs of Hydropower Megaproject Development (March 10, 2014). Energy Policy, March 2014, pp.1-14. Available at SSRN: http://ssrn.com/abstract=2406852↩

Ansar, Atif and Flyvbjerg, Bent and Budzier, Alexander and Lunn, Daniel, Should We Build More Large Dams? The Actual Costs of Hydropower Megaproject Development (March 10, 2014). Energy Policy, March 2014, pp.1-14. Available at SSRN: http://ssrn.com/abstract=2406852↩

Commons Comment

The Dawei Special Economic Zone (SEZ) project in Myanmar will establish large-scale industrial estates for export-led industrialization. Japan has recently expressed interest in investing in the Dawei SEZ. Japan’s economy has been built on this model of industrial development. This development model has caused enormous environmental and health impacts.

Minari Tsuchikawa questions whether it is appropriate for Japan to impose this type of “development” model on Myanmar rather than allow the people of Myanmar to find their own path of sustainable development.